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November 28, 2012

CEOs Want a Deficit Reduction Plan that Benefits Them
    by Robert Kropp

Eighty corporate CEOs join the Fix the Debt campaign, which calls for increased tax breaks for corporations while limiting social programs that help the poor and middle class.

SocialFunds.com -- Are the CEOs of many of the nation's largest corporations blind to the reality of growing wealth inequality in the US? Or are they secure in their belief that political power bought through political expenditures will keep their priorities uppermost, to the detriment of those not blessed with multimillion dollar salaries and generous stock options?

Eighty corporate CEOs—including such beneficiaries of taxpayer bailouts as Jamie Dimon of JPMorgan Chase and Lloyd Blankfein of Goldman Sachs—have joined the Fix the Debt campaign, which aspires to manufacture a crisis out of the so-called fiscal cliff and increase benefits for corporations and the wealthy while cutting programs that help the poor and middle class.

According to a recent analysis by the Institute for Policy Studies, the Fix the Debt campaign "is pushing for less spending on earned-benefit programs, such as Social Security and Medicare, while promoting a rash of corporate tax breaks as part of what they call 'pro-growth tax reform.'"

The corporate tax breaks include a territorial tax system proposal that would allow companies to avoid paying taxes on profits earned overseas when those profits are brought back to the US. The major beneficiaries among the Fix the Debt signatories would be General Electric and Microsoft, the report states. GE alone could gain a tax windfall of almost $36 billion should Congress enact such a proposal.

"A territorial system would give companies additional incentives to disguise US profits as income earned in tax havens in order to avoid paying US income taxes," the report continues.

In 2011, Fortune 500 companies reported $1.5 trillion in overseas profits. "There is evidence that a significant portion of these profits are located in tax havens," according to Citizens for Tax Justice.

The report then turns to the Bush-era tax cuts for wealthy individuals. While Fix the Debt avoids addressing the issue directly, it does call for "comprehensive and pro-growth tax reform, which broadens the base, lowers rates, raises revenues, and reduces the deficit." Even as it calls for lower tax rates, the campaign also wants to reform social programs so as to limit future cost growth.

"The CEOs backing Fix the Debt personally received a combined total of $41 million in savings last year thanks to the Bush-era tax cuts," the report points out. Leon Black of Apollo Global Management alone saved $9.9 million thanks to the tax cuts.

"Some of the Fix the Debt campaign's CEOs have indicated a willingness to give up their individual tax cuts in exchange for a 'balanced' debt deal that would also include corporate tax breaks," the report continues; such sacrifice on their part would, of course, be more than offset through higher corporate profits and the increased bonuses and stock options they would enjoy.

The Institute for Policy Studies provides a number of recommendations for helping create a more sustainable economy. The Stop Tax Haven Abuse Act, introduced by Senator Carl Levin in 2011, "contains a host of measures to combat offshore and tax shelter abuses," according to a press release from Sen. Levin's office.

Other recommendations aim to end the Bush-era tax cuts for the wealthiest two percent, and restore corporate tax revenue to a more meaningful share of receipts. And a tax on financial transactions "would help curb short-term speculation that erodes confidence in the stability of markets while generating massive revenues."

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